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Real estate Q&A

By Charles Carter, McClatchy-Tribune News Service, Source: MCT News Service

QUESTION: I was a homeowners' association board member for 21 years in our little development of about 690 dwellings. I am retired from my job and from the board, and other community homeowners are running the board now.

Here is the problem: The present board is not running the village according the CC&Rs (covenants, conditions and restrictions). We have CC&Rs plus bylaws in place, but it looks like I've caught the present board members doing favors for themselves and each other, rather than following our rules.

Is there any organization I can complain to? I attend the monthly meetings and point out the mistakes, but with no success.

I do not want to get a lawyer involved at this moment. I'm looking for a training time and "schooling," ordered by a judge, that explains to the board that they have to follow the rules and that points out the consequences.

_Dieter Stute, Orange County, Calif.

ANSWER: Homeowners' associations have been the subject of a great many heated discussions lately, especially in areas hit hardest by the subprime crisis and its aftermath, such as Florida and California. You have already made the obvious first step _ pointing out nonconformance and mistakes.

One reader asked if the state corporation commission could help, since a homeowners' association is a corporation. My answer was "no," as those agencies aren't usually set up to handle homeowners' association problems. Lawsuits, whether in small claims or otherwise, are usually the way these things go. Outside of small claims courts, these lawsuits can get very expensive fast. And you can't get injunctive relief in small claims court.

I can't confess to having the magic answer. The Davis-Stirling Act in California provisions for an "alternative dispute resolution," which is prerequisite to an "enforcement action" in the courts against homeowners' associations, not including small claims. Whether this works very well, I can't say. One purpose of the resolution procedure is "enforcement of the governing documents of a common-interest development."

A caveat: I have never been licensed to practice law in California. I think it might be a good idea to talk to a local attorney practiced in this area to find out if this resolution process usually works and under what conditions.

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ABOUT THE WRITER

Charles Carter is an assistant professor of real estate in the Barry Kaye College of Business at Florida Atlantic University. His areas of expertise include urban economics, mortgage-backed securities, appraisal methodology, and law and economics. E-mail questions to ccarte31@fau.edu. Please include your name, city and state.

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